350 Economists Reject Austerity Measures

A group of 350 prominent economists, including economic experts from the AFL-CIO, issued a joint statement warning that the type of austerity measures favored by Republicans and suggested by the bipartisan commission, led by Erskine Bowles and Alan Simpson, would further harm the economy and weaken the social safety net that millions of working families rely upon. They argue that the seemingly obsessive focus on the deficit obscures what the country really needs to focus on—creating jobs.

The economists base their position not just on theory, but on the real-world examples of a number of European countries that have pursued austerity measures.

As Great Britain, Ireland, Spain and Greece have shown, inflicting austerity on a weak economy leads to deeper recession, rising unemployment and increasing misery.

Teresa Ghilarducci, director of Schwartz Center for Economic Policy Analysis at The New School, says that the debt burden is not nearly as important as is the high unemployment rate. She adds that additional fiscal stimulus—mostly focused on spending increases—would better help the economy recover. She supports increases in emergency unemployment insurance, helping state and local governments to prevent layoffs, helping state and local governments fix roads, energy and water infrastructure and increasing spending on education. "Government spending during times of low inflation and high rates of unemployment pays for itself—spending now creates demand so that the private sector has a reason to produce." These types of measures would do much more to increase jobs and bring down the unemployment number and that change would translate into decreased deficits.

The statement makes other suggestions for spending increases that would boost the economy:

The government should invest in areas vital to our economy—to repair crumbling infrastructure, to build 21st-century smart-grid public transportation and renewable energy systems, and to create public- and private-sector jobs. We should also help states prevent layoffs of teachers and other public servants, make early care and higher education more affordable and create public service jobs throughout the nation. It can do so by borrowing at record low interest rates. We can also stimulate recovery without increasing deficits by increasing taxes on the wealthy and pumping the proceeds directly into the economy.

Robert Borosage, co-author of the statement, along with his co-director of the Institute for America's Future Roger Hickey and Robert Kuttner, founder of The American Prospect, say that the voters told Congress and the president the same thing these economists are saying—that they don't want the deficit cut if it means cutting Social Security, Medicare and Medicaid.